Sunday, April 11, 2010

MyProcurement: Rent-Seeking & Patronage Galore

As reported by The Malaysian Insider on Tuesday, 6 April 2010 “Prime Minister Datuk Seri Najib Razak claimed in Singapore on Tuesday night that he has put his political career on the line by committing to purging rent-seeking and patronage politics in Malaysia’s economy. He said this is because those who benefit from these practices are powerful and politically connected, and he hinted that they could even exert their influence in Umno, the party of which he is president.”

Since the Prime Minister has readily admitted that there are strong resistance to his plan to wipe out rent-seeking and patronage in Umno, to the extent that Umno itself has been infiltrated with rent-seekers, we would like to take up the Prime Minister to his call for “inclusiveness” under his New Economic Model to include us in the battle against rent-seeking and patronage.

Given that the Malaysian Anti Corruption Commission has not been performing up to expectations in the battle against corruption, we would like to raise several instances which deserves further investigation by the relevant authorities based on information published on the MyProcurement portal.

  1. Yesterday I highlighted the case of a contract to build a 200-room hostel at the cost of RM78 million which has since been “corrected” by the Minister in parliament as costing RM7.8 million due to another typo error. This contract was awarded to a company, Rafa Sepakat Sdn Bhd based in Terengganu. They've also been awarded another contract worth RM5.7 million to build a “bangunan pejabat agama daerah Marang dan lain-lain kerja yang berkaitan”. A check with other sources revealed another contract worth RM39.9 million to build an affordable housing project awarded by the Terengganu state government to the company.

    A simple check on the company revealed certain interesting information. This company is a new company established only in December 2007 with no revenues in its books as at 31st December 2008. Hence a company with absolutely no track record has been awarded with RM534 million worth of contracts all within the last 6 months. More interestingly, the main 66% shareholder and director of the company, Abdul Rahman bin Abdul Ghani turns 23 years old later this month. Without prejudice to the entrepreneurial talent of En Abdul Rahman who set up the company before he turned 21, the above information surely deserves further investigation by the relevant authorities.
  2. The Ministry of Education awarded a total of 76 contracts for 76 boarding schools in Pahang for the supply of cooked food amounting to a total of RM123.5 million, with prices ranging from a low of RM420,000 to RM3.91 million each. Most of these contracts are also awarded to individuals and not companies.

    While we have not been provided with quantities and the number of students at each school, the largest various between the cost to supply cooked food to these hostels certainly deserve greater scrutiny. A random check of one of the contract receipients, Rafidah binti Halib who was awarded a RM1.4 million contract to supply to SMK Maran is also at the same time a committee member of Wanita Umno, Bahagian Maran.
  3. The Royal Malaysian Police has also awarded 2 interesting contracts, one to purchase “OKI printer ribbon and toner catridges” for RM25.4 million and another to purchase “ink and toner catridges for Canon printers” for RM12.9 million. The amounts works out to approximate RM400 spent for each policeman on the use of OKI and Canon ribbon and toner catridges. However, without additional details on the quantities supplied we are unable to make any further conclusions except to note that a 20% mark up in pricing would mean nearly RM8 million in leakages just for these 2 contracts.
  4. The Ministry of Defence has also awarded a RM82.8 million contract to supply “body vest protection (level III)” to KDI Garment Sdn Bhd. While the amount is large, we are not able to make informed judgements if this contract value is fair or whether there's another decimal point error involved.

    Of more interest however, KDI Garment is a company whose last filed accounts with the Registrar of Companies was dated July 2006, with a revenue of RM1.75 million and a profit of only RM1,607. Should such a company be awarded a contract that is nearly 50 times its last known revenue?

Even with the meagre information which is currently available on the MyProcurement portal which is current inaccurate, incomplete and has very little details – such as no details of tender specifications, dates of tender and award, quantities, number of competitive bids and other relevant details, we have been able to detect various discrepancies and highlight potential “rent-seeking” and “patronage” deals.

We call upon the Prime Minister to let us join hands with him to wipe out rent-seeking and patronage in the Government's procurement system by providing us with full details of procurement contracts for each and every ministry. Better still, if he can make available the list of key office holders at UMNO branches and division levels to us, then we will be able to immediately shortlist all pontential contracts which have been awarded on the basis of “rent-seeking and patronage”.

In line if the Datuk Seri Najib's “performance now” motto, we will deliver this list of suspected rent-seeking and patronage contracts within a period of 14 days after the information has been made available to us.

We are and have always been committed to eradicating rent-seeking and patronage from Malaysia and we hope that the Prime Minister will be equally committed to the cause to put aside partisan interest on matters of such national importance.
Post a Comment